Life insurance is great to have if you want to be confident that your loved ones will be taken care of financially if you pass away. A good policy can get expensive, however, so you need to carefully consider all of your options before buying one. Here are three things you should consider when looking for life insurance so you can choose the policy that best fits your needs.
1. Your Health
Your overall health is the deciding factor in whether or not you qualify for life insurance. The younger you are when you apply, the more likely it is that you will be approved. Having fewer health concerns is also a factor because it puts you at a lesser risk of needing your insurance prematurely. You need to have a good understanding of your health to know which policies you qualify for. For example, some life insurance companies may not cover people with pre-existing heart conditions, so it is helpful to know what is considered heart disease for life insurance before you start looking for a policy. Be honest when assessing your health and look for an affordable policy that offers the coverage you need.
2. The Type of Policy You Need
There are two basic types of life insurance policies. The first type is term life insurance. This policy provides you with life insurance coverage for a certain period of time. Most term life insurance policies last for five-year increments, so you can obtain a policy that covers you for up to 30 years. The major benefit to term life insurance policies is that they are the most affordable type of life insurance and often come with low interest rates.
The second type of life insurance policy you can get is permanent life insurance. This type of policy extends coverage for the duration of your life, whether you live for ten or seventy years after locking in your rate. Permanent life insurance is more expensive than term life insurance because there is a guarantee that you will need to cash in your policy one day. However, it’s a great option for people who are young and healthy, because they can lock in low interest rates now and keep those same terms as they age.
3. How Much Coverage You Can Afford
Your current financial situation plays an important role in which life insurance policy you buy. The more coverage you get, the higher your premium will be. You should carefully evaluate your monthly budget to see how much coverage you can comfortably afford. If you prefer to get a permanent life insurance policy but aren’t in the financial situation to afford the payments yet, you can consider investing in term life insurance that can convert to a more permanent plan in the future.
Life insurance is a good investment, but it can be challenging to choose the right policy. Consider these three things when looking for life insurance so that you can choose a policy that meets your specific needs.
